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The Court holds that certain sections of the Tax Procedures Act are Constitutional

16 April 2020
– 5 Minute Read


The High Court delivered a judgement on 20 February 2020 confirming that sections 57, 58(2), 59 and 99 of the Tax Procedures Act (the TPA) are constitutional.

The judgement was delivered in the matter of Okiya Omtatah Okoiti v the Hon Attorney General and the Kenya Revenue Authority, petition number 156 of 2017. In the matter, Okiya Omtatah (the Petitioner) contended that sections 57, 58(2), 59 and 99 of the TPA were inconsistent with the Constitution of Kenya and therefore petitioned the Court to declare the said sections as unconstitutional.

The sections provide for enforcement procedures which empower the Kenya Revenue Authority (the KRA) to (a) have free access to buildings in order to inspect goods, equipment and records, (b) order persons in custody of documents to produce the documents, (c) make extracts of the documents or information held by the persons, and (d) seize documents for the purpose of determining the tax liability of the persons.

In practice, the KRA has used this section to demand information from bankers and debtors of moneys owing to a taxpayer in order to ascertain how much can be collected from these parties as agents of the taxpayer and also to assess the tax liability of a taxpayer. These sections also provide that (a) documents obtained by the KRA or statements made by the taxpayers shall be admissible in civil or criminal proceedings in which that taxpayer is a party, and (b) penalties will be imposed where persons fail to comply with requests from the KRA for the production of records. The Tax Procedures Act provides the penalty for this as a fine not exceeding one million shillings (KES 1,000,000) and to imprisonment for a term not exceeding three (3) years or both.

In the matter, the Petitioner’s claim was that the sections infringe the right of privacy for individuals and the right to refuse to give self – incriminating evidence (outlined under Article 50 of the Constitution of Kenya). The Petitioner also made reference to certain instances when the KRA had used the provisions against certain politicians and claimed that the powers of the KRA under those provisions were used for politically motivated intimidation and harassment of individuals. The case in point was in 2017 when the KRA wrote to Diamond Trust Bank requesting for financial information for the Mombasa County Governor, Ali Hassan Joho.

The Court dismissed the Petitioner’s claim noting that the enforcement powers provided to the KRA are within the law and are designed to enable the KRA to ascertain the tax liability of the relevant taxpayer. Additionally, the Court noted that the KRA’s powers are not meant to infringe on privacy which relates to the private affairs of an individual. Further, the Court noted that section 6 of the TPA requires that the KRA keep confidential all information unless where specific disclosure is permitted under the express provisions of section 6(2).

On the issue of whether the sections limit the constitutional right to remain silent and the right against self-incrimination, the Court held that the privilege against self-incrimination is not intended to make it easier for people to commit criminal acts nor can it be used to make one immune to a duty imposed on all other citizens, especially those who abide by the law. The Court stated that it is for taxpayers to do their part in properly abiding by tax laws, so as not to arouse suspicion of the KRA which has the mandate to engage them on the accuracy of their tax compliance. Consequently, it held that the use of KRA’s compulsory powers to get records from taxpayers which may be admissible in court is not contrary to the right against self – incrimination.

Putting it into perspective

This declaration of the Court that these provisions are constitutional comes after another High Court ruled that section 59 (4) of the Tax Procedures Act was unconstitutional. This was in the High Court case of Robert K. Ayisi v Kenya Revenue Authority Petition no. 421 of the of 2016 where the High Court held that section 59(4) of the TPA was unconstitutional and invalid on the ground that the section violated the privilege for communications between an advocate and a client. This is outlined under section 137 of the Evidence Act.

The impact of this judgement is that it is now confirmed that KRA has powers to demand information from a wide range of sources to ascertain the tax liability of a person. This is particularly critical to the KRA coming at a time when the KRA is increasing enforcement measures to ensure that all taxpayers pay their fair share of tax. However, there are concerns that the Court failed to address some of the critical issues that the Petitioner had raised such as the use by the KRA of these provisions for political reasons and how such persons would be protected against enforcement measures that are politically instigated.